Messenger - Vol. 1, No. 3, Page 9
Spring 1992
Dream house may be just a dream
Jeffrey Raffel, professor of urban affairs and public policy, had
little trouble finding funding sources for his study of home buyers in
New Castle County, Del.
The county's Planning Department and Department of Community
Development and Housing, as well as a number of area agencies and
organizations, were working on developing incentives for first-time
home buyers, hoping to give the ailing housing market a shot in the
arm. But, they kept having difficulty finding the information they
needed. When Raffel approached the county with a proposal to fund a
general study of home buyers, the planners asked him to narrow the
focus and A Profile of First-Time Home Buyers in New Castle County was
commissioned.
Interest was so great that Raffel received support from a wide
variety of groups, including two New Castle County school districts,
the Delaware Homebuilders Association, the State Housing Authority and
the state legislature.
The facts and figures that the planners wanted are not readily
available even on a national level. In fact, Raffel said that the U.S.
Census Bureau produced its first-ever, first-time home buyers report
just as his was in the production stage.
Raffel and Gi-Yong Yang, a graduate student, mailed surveys to
almost 8,000 households that had purchased homes in New Castle County
in 1988. They received 2,788 responses.
They found that 31 percent of all home buyers in New Castle
County in 1988 were buying homes for the first time. Of those, half
were between the ages of 20-29, 93 percent were white, 64 percent were
married and 62 percent held white-collar jobs with an average income
level of $42,190. Only 4 percent of the county's first-time home
buyers made below $20,000.
When compared to the U.S. Census Bureau's newly compiled figures,
New Castle County's first-time home buyers were comparable in age and
marital status, but that's where the similarities end.
Delaware's first-time home buyers made more money and were less
likely to be black or have children at home than those in the nation.
Nationally, 19 percent of first-time home buyers make under $20,000,
while in Delaware that figure is 4 percent.
All of that being true, the report states that "63 percent of the
households in New Castle County could not afford a median-priced home
and 47 percent could not afford the least-expensive, new construction.
Of total households, 38 percent could not afford a $20,000 mobile home
or a $420 per month rent. The affordability issue is expected to
continue unless the gap between wages and housing costs is lessened."
The average sale price of a home purchased by a first-time buyer
in New Castle County was $75,858. First-time buyers were more likely
to purchase less spacious, attached and multiple family dwellings in
the city of Wilmington or New Castle areas and were less likely to be
as satisfied with their homes or locations.
Based on data compiled by the University's Bureau of Business and
Economic Research, the report concludes that, despite the economic
growth Delaware experienced in the 1980s, real income for New Castle
County residents declined 10 percent. For renters, the loss in buying
power was 25 percent, partially as a result of rent increases. That
loss of buying power, coupled with a 45 percent hike in the value of
owner-occupied housing, has just about priced many first-time buyers
out of the market.
"Renters who might become first-time home buyers have become
increasingly less able to afford the transition to home ownership. The
affordability gap is clearly increasing," the survey concludes.
-Barbara Garrison